Rogue trader Nick Leeson talks of the huge bet he lost

ROGUE trader Nick Leeson knows all about crime and punishment. He lost £862m betting on the markets in the 1990s. In his case, he says the punishment — four years, four months in Singapore’s maximum security jail — fitted the crime.

Now he roams the world from his new home in County Galway, Ireland, talking about his infamous role in the collapse of Barings Bank. He has been in Johannesburg for a few days as a guest of Trifecta Capital Services, speaking about risk management, compliance and corporate responsibility.

"It wasn’t intentional," he says of his unauthorised, fraudulent and speculative trading that caused the collapse of the UK’s oldest investment bank. "People sometimes think that what I did was meticulous and planned out. It wasn’t — I made mistakes," he says.

He hid his accumulating trading losses in Asian futures and options markets. He knew he had to refer these deficits residing in the bank’s main error account for the region — number 88888, an extremely lucky series of numbers in Chinese — to London, but did not.

"I chose not to do that. During the course of the day the error probably got worse, the loss bigger," he says. "I felt I was failing, so did not want to take those steps."

In 1992, he was appointed GM of a new Barings operation in futures markets on the Singapore International Monetary Exchange. He was not a "wide boy" from London’s booming financial district of the time, although traders from his working-class English background were inevitably dubbed "barrow boys" — a term he despises.

Instead, he says he was "quite introverted" and went home to nearby Watford on weekends to be with his "mates" who worked on building sites.

"We were always characterised as barrow boys — we didn’t have the blue blood," he says. This led him to loathe a month he spent around this time with Barings in Hong Kong, where many traders had such airs and graces.

But he says Singapore was different — and was quite new to futures trading in the early 1990s.

Barings was in flux at the time and was looking for a buyer for Barings Securities. Jobs were being lost, people moved around.

The bank had "great research" and "transacted business immediately", Leeson says. "It’s what excited me about Barings. I had enjoyed a good degree of success up to that point."

But it had no training courses or real support, he says, "and a single compliance officer in London, I think". Before Singapore, Leeson had been with the bank in Indonesia. However, he says it had a history of problems in the form of unsettled trades there and in New York and South Korea.

In his brash mid-20s in Singapore, he was soon charged by police for "mooning" (displaying his bare buttocks), which he says he also did back in Watford. Barings got him off a charge of "outraging female modesty", which could carry a one-year jail term.

"Barings were very keen to have me back and making money — in their opinion. Obviously I was losing money (by then)" he says. He lost huge sums, sometimes making some back, but always hiding it, for about two-and-a-half years.

"I wanted the game to be up on a number of occasions, but couldn’t. It would promote my failure to another level."

Other people at the office were also making mistakes, he says. So he also covered for them. As chief trader for Barings in Singapore, Leeson was also responsible for settling his own trades, jobs usually done by two different people.

"They flew by the seat of their pants on a lot of occasions. It was certainly not usual. They were probably looking at it from a cost standpoint more than anything else. And obviously their trust was very misplaced," he says.

"Soon I couldn’t cope, and then did not do the right thing. In financial markets you don’t really show weakness, as weakness is taken advantage of," he says. "There were no risk management systems — nothing to value anything I was doing. No parameters of how the position was going to change if the market went down."

To this end, he was "continually postponing" reporting his losses, downing quantities of alcohol.

To cap it all, a massive earthquake flattened the city of Kobe in Japan in early 1995, sinking all hopes of a resurgence in the markets he traded in, including Nikkei futures.

"I couldn’t have been in any worse position," Leeson says.

"Kobe pushed the market another degree lower. I was wanting success and fearing failure. There was a culture at Barings at the time where it was all about being successful."

His father was a building plasterer, his mother a nurse who had higher aspirations. "More money and a more comfortable way of life" drove the family. "I think those are working-class values anyway, for people and their children."

Leeson says the conditions that led to his fall from grace exist in financial markets today and that regulators are still "catching up".

"Absolutely. But the problem is the marketplace continuously evolves — and is fast and complex," he says. "Some will tell you regulators are at the top of their game; but if they are, they are at the bottom of the bankers’ game."

Leeson says he is sorry for his transgressions. "Yes, and you can’t not be. But you can’t wake up every day thinking, ‘Woe is me.’ But there is total remorse," he says.

"You become blinkered and focused on trying to correct the situation. You forget how much it is hurting other people."

He was diagnosed with colon cancer before leaving prison, surviving that. He and his wife of the time parted before he was released, and have never spoken again. She fled with him to Malaysia and Thailand in late February 1995, when the game was nearly up. "The questions were getting closer. But I managed to keep (Barings managers) away from the real stuff.

"She was part of the process in the lies I was telling," he says.

A week later he was arrested in Germany, and nine months later was extradited to Singapore.

"I think the punishment fitted the crime — and was probably the benchmark for everything that followed." Much has followed. Some lists put him in the top 10 financial crimes of all time; others lower.

"I’m going down all the time — I thought I was number 13," Leeson says.

ROGUE trader Nick Leeson knows all about crime and punishment. He lost £862m betting on the markets in the 1990s. In his case, he says the punishment — four years, four months in Singapore’s maximum security jail — fitted the crime.

Now he roams the world from his new home in County Galway, Ireland, talking about his infamous role in the collapse of Barings Bank. He has been in Johannesburg for a few days as a guest of Trifecta Capital Services, speaking about risk management, compliance and corporate responsibility.

"It wasn’t intentional," he says of his unauthorised, fraudulent and speculative trading that caused the collapse of the UK’s oldest investment bank. "People sometimes think that what I did was meticulous and planned out. It wasn’t — I made mistakes," he says.

He hid his accumulating trading losses in Asian futures and options markets. He knew he had to refer these deficits residing in the bank’s main error account for the region — number 88888, an extremely lucky series of numbers in Chinese — to London, but did not.

"I chose not to do that. During the course of the day the error probably got worse, the loss bigger," he says. "I felt I was failing, so did not want to take those steps."

In 1992, he was appointed GM of a new Barings operation in futures markets on the Singapore International Monetary Exchange. He was not a "wide boy" from London’s booming financial district of the time, although traders from his working-class English background were inevitably dubbed "barrow boys" — a term he despises.

Instead, he says he was "quite introverted" and went home to nearby Watford on weekends to be with his "mates" who worked on building sites.

"We were always characterised as barrow boys — we didn’t have the blue blood," he says. This led him to loathe a month he spent around this time with Barings in Hong Kong, where many traders had such airs and graces.

But he says Singapore was different — and was quite new to futures trading in the early 1990s.

Barings was in flux at the time and was looking for a buyer for Barings Securities. Jobs were being lost, people moved around.

The bank had "great research" and "transacted business immediately", Leeson says. "It’s what excited me about Barings. I had enjoyed a good degree of success up to that point."

But it had no training courses or real support, he says, "and a single compliance officer in London, I think". Before Singapore, Leeson had been with the bank in Indonesia. However, he says it had a history of problems in the form of unsettled trades there and in New York and South Korea.

In his brash mid-20s in Singapore, he was soon charged by police for "mooning" (displaying his bare buttocks), which he says he also did back in Watford. Barings got him off a charge of "outraging female modesty", which could carry a one-year jail term.

"Barings were very keen to have me back and making money — in their opinion. Obviously I was losing money (by then)" he says. He lost huge sums, sometimes making some back, but always hiding it, for about two-and-a-half years.

"I wanted the game to be up on a number of occasions, but couldn’t. It would promote my failure to another level."

Other people at the office were also making mistakes, he says. So he also covered for them. As chief trader for Barings in Singapore, Leeson was also responsible for settling his own trades, jobs usually done by two different people.

"They flew by the seat of their pants on a lot of occasions. It was certainly not usual. They were probably looking at it from a cost standpoint more than anything else. And obviously their trust was very misplaced," he says.

"Soon I couldn’t cope, and then did not do the right thing. In financial markets you don’t really show weakness, as weakness is taken advantage of," he says. "There were no risk management systems — nothing to value anything I was doing. No parameters of how the position was going to change if the market went down."

To this end, he was "continually postponing" reporting his losses, downing quantities of alcohol.

To cap it all, a massive earthquake flattened the city of Kobe in Japan in early 1995, sinking all hopes of a resurgence in the markets he traded in, including Nikkei futures.

"I couldn’t have been in any worse position," Leeson says.

"Kobe pushed the market another degree lower. I was wanting success and fearing failure. There was a culture at Barings at the time where it was all about being successful."

His father was a building plasterer, his mother a nurse who had higher aspirations. "More money and a more comfortable way of life" drove the family. "I think those are working-class values anyway, for people and their children."

Leeson says the conditions that led to his fall from grace exist in financial markets today and that regulators are still "catching up".

"Absolutely. But the problem is the marketplace continuously evolves — and is fast and complex," he says. "Some will tell you regulators are at the top of their game; but if they are, they are at the bottom of the bankers’ game."

Leeson says he is sorry for his transgressions. "Yes, and you can’t not be. But you can’t wake up every day thinking, ‘Woe is me.’ But there is total remorse," he says.

"You become blinkered and focused on trying to correct the situation. You forget how much it is hurting other people."

He was diagnosed with colon cancer before leaving prison, surviving that. He and his wife of the time parted before he was released, and have never spoken again. She fled with him to Malaysia and Thailand in late February 1995, when the game was nearly up. "The questions were getting closer. But I managed to keep (Barings managers) away from the real stuff.

"She was part of the process in the lies I was telling," he says.

A week later he was arrested in Germany, and nine months later was extradited to Singapore.

"I think the punishment fitted the crime — and was probably the benchmark for everything that followed." Much has followed. Some lists put him in the top 10 financial crimes of all time; others lower.

"I’m going down all the time — I thought I was number 13," Leeson says.

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